To: Proximity mobile team From: Peter Wong Date: February 22, 2010Company Profile Subject: Vonage Strategy Analysis Here is my Vonage strategy analysis. Although Vonage is not the dominating force in the communications market, they’re now implementing new technology that can put them in position for future success. Gen Y is always looking for more cost efficient ways to live conveniently and to not be in hand cuffs to long term contracts.
Vonage is a software technology company that enables high-quality voice and messaging services across multiple devices and locations over broadband networks. Vonage was found by Jeffrey Citron. The VoIP company was unincorporated in May 2000 and then changed the name to Vonage Holding Corp. in 2001 with their IPO. Vonage’s main source of revenue is from consumer fees and monthly service charges to the customer. Vonage currently has 2.5 million subscribers generating over $220 million in Third Quarter revenues in 2009. Vonage is expecting to hear a downturn in their earnings for the fourth quarter of 2009 in the next couple weeks. Competitive Landscape The primary force driving competition in the VoIP market is the hard selling of the no monthly fee of just buying an adapter for the phone jack that hooks to the computer. The selling point in Vonage is the very low monthly cost to call all over the world in more than 60 countries. A major competitor against Vonage’s business structure is the new Magic Jack. Magic Jack has the same VoIP services just like Vonage but offers these services with just one fee up front for the adapter with no monthly costs that Vonage has. However Vonage offers a broader range of countries than Magic Jack does, there are opportunity costs involved with the two companies. Vonage’s Strategy Vonage’s strengths of: VoIP Market position and brand, attractive value, innovative and low-cost technology platform, and strong distribution is enforced by their strategic focus of: on-boarding of early life satisfaction, distribution and marketing effectiveness, network and product platform quality, new and enhanced products, and cost optimization. Vonage is implementing a new feature to sell an iPhone or iTouch application that allows phone service without any kind of yearly contracts, so you are not hand-cuffed to any kind of long term contracts. This is a huge step towards being free from long term yearly contracts which no one likes. This allows users to cancel the service at anytime without any fees or charges. Gen-Y Implications Even though Vonage’s state of the art VoIP services that provide communication services in over 60 countries for monthly cost sounds great, I do not see Gen Y would see this attractive against their competitors. References Levy, Ari. Vonage Founder Stands To Profit Despite IPO Flop. (2006, June 8). The WashingtonRetrieved February 21, 2010 from **http://www.washingtonpost.com/wp-dyn/content/article/2006/06/07/AR2006060702229.html**. Vonage. About Us. (2001). Vonage.com Retrieved February 21, 2010 from **http://ir.vonage.com/faq.cfm?faqid=2**. Google. Google Finance: Vonage. (2010). Google Finance Retrieved February 21, 2010 from **http://www.google.com/finance?q=vg**
To: Proximity mobile team
From: Peter Wong
Date: February 22, 2010Company Profile
Subject: Vonage Strategy Analysis
Here is my Vonage strategy analysis. Although Vonage is not the dominating force in the communications market, they’re now implementing new technology that can put them in position for future success. Gen Y is always looking for more cost efficient ways to live conveniently and to not be in hand cuffs to long term contracts.
Vonage is a software technology company that enables high-quality voice and messaging services across multiple devices and locations over broadband networks. Vonage was found by Jeffrey Citron. The VoIP company was unincorporated in May 2000 and then changed the name to Vonage Holding Corp. in 2001 with their IPO.
Vonage’s main source of revenue is from consumer fees and monthly service charges to the customer. Vonage currently has 2.5 million subscribers generating over $220 million in Third Quarter revenues in 2009. Vonage is expecting to hear a downturn in their earnings for the fourth quarter of 2009 in the next couple weeks.
Competitive Landscape
The primary force driving competition in the VoIP market is the hard selling of the no monthly fee of just buying an adapter for the phone jack that hooks to the computer. The selling point in Vonage is the very low monthly cost to call all over the world in more than 60 countries.
A major competitor against Vonage’s business structure is the new Magic Jack. Magic Jack has the same VoIP services just like Vonage but offers these services with just one fee up front for the adapter with no monthly costs that Vonage has. However Vonage offers a broader range of countries than Magic Jack does, there are opportunity costs involved with the two companies.
Vonage’s Strategy
Vonage’s strengths of: VoIP Market position and brand, attractive value, innovative and low-cost technology platform, and strong distribution is enforced by their strategic focus of: on-boarding of early life satisfaction, distribution and marketing effectiveness, network and product platform quality, new and enhanced products, and cost optimization.
Vonage is implementing a new feature to sell an iPhone or iTouch application that allows phone service without any kind of yearly contracts, so you are not hand-cuffed to any kind of long term contracts. This is a huge step towards being free from long term yearly contracts which no one likes. This allows users to cancel the service at anytime without any fees or charges.
Gen-Y Implications
Even though Vonage’s state of the art VoIP services that provide communication services in over 60 countries for monthly cost sounds great, I do not see Gen Y would see this attractive against their competitors.
References
Levy, Ari. Vonage Founder Stands To Profit Despite IPO Flop. (2006, June 8). The Washington Retrieved February 21, 2010 from **http://www.washingtonpost.com/wp-dyn/content/article/2006/06/07/AR2006060702229.html**.
Vonage. About Us. (2001). Vonage.com Retrieved February 21, 2010 from **http://ir.vonage.com/faq.cfm?faqid=2**.
Google. Google Finance: Vonage. (2010). Google Finance Retrieved February 21, 2010 from **http://www.google.com/finance?q=vg**